$8.3 million penalty imposed on Sydney forklift gas cartel

A total of $8.3 million in penalties was imposed by the Federal Court upon two forklift gas supply companies, Renegade Gas Pty Ltd (Renegade), Speed-E-Gas (NSW) Pty Ltd (Speed-E-Gas) and three individuals of the two companies, for engaging in cartel conduct restricting competition.

Following extensive investigation by the ACCC, it was established that an understanding was in place and acted upon by the companies, whereby neither company would poach the customers of the other; and where one did, the other would be allowed to ‘poach back’ the customers lost. The contraventions were not contested by any of the respondents.

In finding the understanding amounted to cartel conduct “with the potential to adversely affect a high proportion of manufacturing and distribution businesses across Sydney”; the Court accepted the ACCC’s submission that the appropriate penalty for the corporations be set at $5 million and certain discounts be applied in respect of the respondents’ degree of co-operation.

To this effect, Renegade received a penalty of $4.8 million, including a limited discount of 4% to reflect the company’s lack of cooperation with the ACCC during the investigation and litigation. Speed-E-Gas on the other hand, received a discount of 40%, reducing its penalty to $3.1 million. This substantial discount reflected Speed-E-Gas’ early cooperation and transparency with the ACCC.

As for the individual respondents, former managing director of Renegade, Paul Berman, received the largest penalty of $250,000 and was disqualified from managing a corporation for three years. As a direct organiser of the understanding, Berman’s conduct was stated to be deliberate, seriously incompetent and irresponsible. Accordingly, his penalty is one of the largest ordered against an individual for cartel conduct. In addition, a senior officer of Renegade and a former senior officer of Speed-E-Gas, were ordered to pay penalties of $100,000 and $50,000 respectively.

The decision demonstrates the ACCC’s desire to seek large penalties against both corporations and individuals for cartel conduct; and illustrates the importance of complying with the ACCC early in the investigation and throughout any subsequent litigation to substantially reduce any penalties imposed.